Although the charity was partially successful in winning the principle in the case, the sector would only be able to claim back tens of thousands of pounds rather than the £5m hoped for.
The Children?s Society argued that it should be able to recover VAT input tax in relation to recruiting and retaining members of its ‘committed givers club’. This included costs associated with producing a magazine for club members, as well as the street fundraisers who recruited new members.
The tribunal disagreed with the charity’s argument and ruled that only the VAT costs of producing the magazine could be reclaimed.
Charles Nall, finance and administration director at the Children’s Society, expressed his disappointment and said he would be in contact with other charities to share costs for an appeal.
‘The Children’s Society, in common with other charites, wishes to see greater fairness in the application of the underlying principles of VAT,’ Nall said. ‘The public do not to wish to see their hard-earned gifts and payments eroded by VAT.’
Amnesty International FD Melvin Coleman is a vocal supporter of face-to-face fundraising, and will also be unhappy at the test-case ruling.
A spokesman for Customs said it would ‘study the tribunal decision closely, and consider its implications carefully, before deciding whether to appeal to the High Court’ on the small point that it lost.
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